Debt Free

Student loans are a fact of life for many who continued their education beyond high school. It can be brutal trying to repay them, along with all the other financial obligations one faces after college graduation. If you've just graduated from college, are about to, or have been out for a while but don't seem to be making too much headway repaying your plethora of student loans, you may be looking for some help. One place you may find help repaying your student loans is actually the government, both state and federal. You may have seen those late night ads promising free government money to use any way you want, paying back college loans included. Well, just go back to watching the late show, because the feds aren't just going to send you a big, fat check, or credit you back your loan balance. 

There are, however, some government programs that can help you repay your student loans. The catch is that you'll have to put that fancy Wall Street or corporate career on hold for a while and eat from the public trough for a while. That's right, in most cases, you have to get a government job in order for Uncle Sam (or any of the states) to assist with your student loan repayment.

Civil Service Student Loan Forgiveness
Here are some of the places you can get government help to pay back some of the student loans you have accrued in your quest for enlightenment. Which type of student loan you have will help determine which repayment or forgiveness program you're eligible for. If you're feeling charitable and want to see the effects of your generosity assist others around the world, you can join the Peace Corps. By so doing, you'll be eligible for deferment of Stafford and student consolidation loans, but your real benefit from a student loan perspective would be the ability of Peace Corps volunteers to have up to 70% of Perkins loans forgiven. The actual forgiveness amount depends upon your length of service, and accrues at 15% per year.

If you want a job where you can sleep in your own bed every night, without worrying about mosquito netting, there are many other government programs that can help with your student loans. If you are a clinical researcher, the National Institute of health offers a series of loan forgiveness programs. One catch is that you must have a doctoral level degree and work for at least 20 hrs a week per quarter on various types of research, including pediatric, contraception and infertility, and clinical. If you meet the conditions, you be eligible for a substantial $35,000 per year repayment of your federal student loans. For all 5 NIH repayment programs, see here.

Teacher Student Loan Forgiveness
You can get some great student loan forgiveness benefits by entering the education field. In some cases you'll need it. As with research positions, forgiveness from the Department of Education is determined by which type of student loan(s) you have. Many of the programs give benefits for teaching in disadvantaged or low income schools. In many inner cities or small, rural communities, this includes just about any school you'll work in.

Another student loan forgiveness program available through the Dept. of Education includes the Teacher Loan Forgiveness Program. This one makes available up to $5,000 in student loan forgiveness for direct and FFEL loans. It’s mainly targeted at teachers in the fields of math, science and special education, as teachers in those disciplines can be eligible for up to $17,500. The conditions of eligibility include receiving your loan after October 1, 1998 and being employed full time as a teacher for 5 consecutive years. To read the full list of qualifications and eligibility, click here.

Military Student Loan Forgiveness
Another place that you can seek federal aid for your federal aid is by joining the military. A noble and difficult profession, you’ll not be greatly financially rewarded by such a career choice, so some help repaying your outstanding loans would probably be welcome. In many cases, you must be aware of the programs before you enlist to be eligible, so check up on them first. There are many government programs that will forgive part of your loan, or in some cases discharge it altogether.

One is for loans received under Title 4 of the Higher Education Act. This makes those serving in the military eligible for partial loan forgiveness if they served in an area of hostilities for at least one year and have a Perkins loan or a National Direct Student Loan. Of course you’ll need to fill out a government form to see if you are eligible for forgiveness. You’ll need to send a copy of your discharge papers and a letter of explanation to your loan servicing agency, where it will be reviewed, and then sent to that room at the end of Raiders of the Lost Ark for storage.

Other loan forgiveness programs for military veterans include the Army repayment program. This is part of the Montgomery GI Bill enacted at the end of WWII. In this case the Army will repay a portion of your student loan directly at the rate of 1/3 of your outstanding balance for each year of eligible service. This applies if the loan was not in default when you entered the Army, that you enlisted after 30 September 1982, that you enlist in a critical military occupational specialty, and that you have a valid high school diploma at the time of enlistment. Stafford loans, Perkins loans, SLS, William D. Ford loans and PLUS loans all qualify. Even consolidated student loans are eligible if they are in the student’s name.

If you have a personal loan, an equity loan, a loan from an educational institution, or if you consolidated your student loans in someone else’s name (such as your parents), you are not eligible for the Army program. Check to see that you loan is covered under parts B, D, or E of Title 4 of the Higher Education Act before you sign your enlistment agreement if you want the Army’s help in repaying your loans. Make sure you go over the terms of your loans and their repayment completely with your recruiter before putting pen to paper. You don’t want to enlist with the idea that the Army will be repaying all or part of your loans, only to discover that you’re still on the hook for the monthly payments, and you are now on a 2^nd lieutenant’ salary.

Chapter 1606 and 1607 of the GI bill apply to reserve and National Guard members. Chapter 1606 provides for monthly repayment of education expenses regardless of service, while 1607 gives increased benefits for those who served in the Guard or reserve for over 90 days of active duty ($400/month) or 1 year ($600/month). If you are eligible for educational assistance under chapter 1607, but stop drilling, you will revert to the money paid under 1606 for the length of your deployment plus 4 months.

Other Student Loan Options
There are many other government programs that can either repay or forgive all or part of your student loans. I’ll address some more of them in a future post. In addition, you may benefit from student loan consolidation. As with other loan consolidations, you’ll have only one payment to worry about, and you could get a better interest rate. That will obviously lower your monthly payment and possibly allow you to quit that second job you’re saddled with now.